Small company threshold to rise from ₹10 crore to ₹20 crore

The government replied by citing the need for flexibility in the economy, listing phased decriminalization acts, and outlining the expansion of merger eligibility criteria.

Asked and answered by: Asked by Shri Trivendra Singh Rawat and Dr. Sanjay Jaiswal; Answered by the Ministry of Corporate Affairs (Minister Smt. Nirmala Sitharaman).

What the government said

• The paid-up share capital threshold for 'Small Companies' is proposed to increase from Rs. 10 crore to Rs. 20 crore to allow flexibility based on business growth and economic expansion.
• Decriminalization of offences under the Companies Act, 2013, was carried out in phases: 16 offences in 2019, 35 offences in 2020 (with imprisonment removed for 11), and 12 offences under the LLP Act in 2021.
• The fast-track merger (FTM) framework under Section 233 was expanded in 2021 to include start-ups, in 2024 to allow cross-border reverse flipping, and in 2025 to include unlisted companies with borrowings not exceeding Rs. 200 crores.
• Provisions exist for deemed approval under the FTM framework to ensure mergers are approved within a 60-day timeline.

Also in the document

• The answer states that the specific parameters for the threshold increase are intended to provide flexibility depending on the nature and scale of business, rather than listing specific economic indicators.
• The government notes that the gradual decriminalization has reduced the burden of litigation while ensuring grave violations are still dealt with stringently.